Question

16. Calculate goodwill of a firm on the basis of three years purchase of the Weighted Average Profit of the last
four years. The profits of the last four financial years ended 31st March, were: 201725,000; 2018 27,000
2019 46,900 and 2020-53,810. The weights assigned to each year are: 2017-1;2018-2, 2019-3
2020 - 4. You are supplied the following information:
(1) On 1st April, 2017, a major plant repair was undertaken for 10,000 which was charged to revenue. The
said sum is to be capitalised for goodwill calculation subject to adjustment of depreciation of 10% pa
on Written Down Value Method.
(II) The Closing Stock for the years ended 31st March, 2018 and 2019 were overvalued by 1,000 and
2,000 respectively.
(III) To cover management cost an annual charge of 5,000 should be made for the purpose of goodwill
valuation.​

Answer 1

Answer:

X-axis=(5,0)   Y-axis =(0,5)

Comparing with (n,0)  and  (0,m)

n=5  and m=5

∴m+n=5+5=10